2014 (5) TMI 330 - AT - Customs

Refund claim of the duty - Notification No. 21/2002, dated 1-3-2002, Sl. Nos. 321 and 322 Short Suppliance of Base Station Controllers and Base Transceiver Systems known as BSC/BTS Importation of certain parts from China Held that - Considering fact that assesse has found short supplied goods and claimed the benefit of Notification No. 21/2002 and it is also admitted position that these short supplied goods are not used in the manufacture of intended finished goods - Therefore, the benefit of notification is not available to assessee Thus, confirmation of demand of duty is correct. In the impugned order the learned Commissioner (A) rejected refund claim of assessee holding that same is not legally correct - In fact the issue of refund claim was not the subject matter in the impugned show cause notice - Therefore, the said part of the impugned order is set aside - The appellants are at the liberty to proceed their refund claim on its own merits Decided partly in favour of assesse.

Summary

Issues: Appeal against demand of differential duty under Notification No. 21/2002 for short supplied goods.

Analysis:
1. The appellant, a manufacturer of telecom instruments, imported parts to fulfill an order from BSNL for Base Station Controllers and Base Transceiver Systems. After customs clearance, it was discovered that there was a shortage of populated PCBs and High power Amplifiers of the imported goods.

2. The appellant filed a refund claim for the duty paid on the short supplied goods, arguing that they should not be liable to pay duty for goods not received. They also claimed the benefit of Notification No. 21/2002 for concessional duty rates.

3. The appellant contended that they immediately informed the authorities about the shortage and even contacted the foreign supplier, who confirmed that the short supplied goods were not shipped. They argued that if duty was payable, they should still receive the benefit of the notification for the short supplied goods.

4. The Respondent, however, argued that the benefit of Notification 21/2002 is only available when the imported goods are used in the manufacture of the intended finished goods. Since the short supplied goods were not utilized in the intended manufacturing process, the benefit of the notification should not apply.

5. After hearing both sides, the Tribunal found that the short supplied goods were not used in the manufacture of the intended finished goods, making the appellant ineligible for the benefit of the notification. Consequently, the confirmation of the demand for duty was upheld, and the appeal was dismissed.

6. Additionally, the Tribunal noted that the Commissioner (Appeals) had erroneously rejected the refund claim of the appellant, which was not the subject matter of the show cause notice. Therefore, that part of the order was set aside, allowing the appellant to pursue their refund claim independently based on its own merits.

This judgment clarifies the application of Notification No. 21/2002 in cases of short supplied goods and emphasizes the requirement that imported goods must be used in the manufacturing process to avail the benefits of such notifications.